It's a $28.3 billion insurance megadeal

donjohnson / FlickrThe insurance provider Ace Limited is buying Chubb in a $28.3 billion deal, it announced on Wednesday.

The boards of both companies have agreed to the deal, which will see Chubb shareholders receive $62.93 per share in cash and 0.6019 in Ace shares.

Chubb shares closed at $95.14 on Tuesday, so the deal is about a 30% premium to that price. Ace's stock closed at $101.68 per share.

Ace shareholders will own about 70% of the new company. The deal will help the companies provide wider insurance coverage for clients' mansions and yachts, according to Bloomberg.

In trading on Wednesday, Chubb shares jumped by up to 29%, and Ace rallied by up to 3%.

"We are thrilled to announce the acquisition of Chubb, a venerable company with a great brand," Evan Greenberg, chairman and CEO of Ace Limited, said in the statement. "This transaction advances our strategy in a meaningful way and represents an outstanding opportunity to create significant value over a reasonable period of time for both Ace and Chubb shareholders."

Greenberg will be CEO of the new company, while Chubb CEO John Finnegan will be an executive vice chairman for external affairs of North America.

The companies estimate that they will save about $650 million pretax as a combined entity.

The deal is expected to close in the first quarter of next year.

It has been a massive year for M&A activity. Data from Dealogic released Tuesday showed that US M&A volume passed $1 trillion in the first half of the year. It was the first time for any country.

The surge in M&A volume was the subject of a June 8 note from Citi.

"We have seen over $1.8 tn in M&A volume so far this year and we fully expect the heavy pace to continue going forward," Stephen Antczak said. "Key reasons include still-favorable credit conditions, the need for consolidation in select sectors, and the advantage that strategic acquirers have over financial sponsors at this point."

This chart shows how the first half of 2015 has dwarfed recent periods: